2012 (4) TMI 419 - HC - Income Tax

Reopening - Validity of notice - proposal to withdraw the benefit of deduction u/s 80IA - held that - only on scrutiny assessment the total income of the petitioner was determined after allowing deductions under section 80-IA(4)(iii) and section 80-IA(10) - the notice for reopening within the period of four years from the end of the relevant assessment year is not found sustainable. It is also required to be noted that while disposing of the objections, it was harped upon the Assessing Officer that the mandated condition for availing of the benefit under section 80-IA(4)(iii) was to have an industrial park notified by the Central Board of Direct Taxes and the factum of not possessing the Central Board of Direct Taxes notification was not brought on the record by the assessee. This failure also attributed to the assessee-company for not disclosing fully and truly. This very basis ; as mentioned hereinabove, is not sustainable in wake of clear direction by this Bench to the Union of India for issuance of such notification and this very edifice on which this re-opening is based has been demolished. Notice for reopening; even though issued within four years from the end of the relevant assessment year and in spite of the Assessing Officer having wide powers under section 147 of the Act (in the post-amendment period - with effect from 1st April, 1989) overwhelmingly, the factual matrix and the decision of this court would not permit such a notice to continue, and resultantly, the impugned notice dated October 1, 2009, issued under section 148 of the Income-tax Act, 1961, and all consequential proceedings are hereby set-aside and are quashed.

Issues Involved:
1. Validity of the notice of reopening issued under section 148 of the Income-tax Act, 1961.
2. Justification for the reassessment proceedings.
3. Eligibility for deduction under section 80-IA(4)(iii) and section 80-IB(10) of the Income-tax Act.
4. Requirement of notification by the Central Board of Direct Taxes (CBDT) for industrial parks.
5. Alleged failure of the assessee to disclose material facts fully and truly.
6. Alternative efficacious remedy available to the petitioner.

Issue-wise Detailed Analysis:

1. Validity of the Notice of Reopening:
The petitioner challenged the notice of reopening dated October 1, 2009, issued under section 148 of the Income-tax Act, 1961, along with the preliminary order dated December 8, 2010. The notice was primarily based on the ground that the petitioner's industrial park was not notified by the CBDT till the end of the relevant year, and therefore, the deduction under section 80-IA(4)(iii) was wrongly claimed and granted.

2. Justification for the Reassessment Proceedings:
The reasons for reopening were furnished, stating that the industrial park did not commence during the year and there were no construction or manufacturing activities by any undertaking during the year. The Assessing Officer requested further details from the assessee, questioning the deduction claimed under section 80-IA(4) and section 80-IB(10). The assessee raised objections, emphasizing that the scrutiny assessment was finalized under section 143(3) and that there was no failure on their part to disclose material facts.

3. Eligibility for Deduction under Section 80-IA(4)(iii) and Section 80-IB(10):
The petitioner contended that they had developed the industrial park as per the approval granted by the Ministry of Commerce and Industry and fulfilled all requisite criteria for availing the benefit under section 80-IA(4)(iii). The Assessing Officer, however, argued that the industrial park was not notified by the CBDT and that the petitioner did not disclose this fact, leading to the reopening of the assessment.

4. Requirement of Notification by the CBDT:
The central issue concerned the non-issuance of notification by the CBDT. The court referred to a previous case involving the same petitioner, where it was held that the petitioner had fulfilled all requirements for availing tax benefits under section 80-IA(4)(iii) and directed the Union of India to issue the necessary notification. The court concluded that the lack of CBDT notification could not be attributed to the petitioner and that the reopening of the assessment on this ground was not sustainable.

5. Alleged Failure of the Assessee to Disclose Material Facts Fully and Truly:
The court noted that the Assessing Officer's claim of the assessee's failure to disclose material facts was not justified. The petitioner had fulfilled its obligations, and the responsibility for issuing the notification lay with the CBDT. The court emphasized that the reopening of the assessment based on this ground was not valid.

6. Alternative Efficacious Remedy Available to the Petitioner:
The Deputy Commissioner of Income-tax argued that the petition was premature as an alternative efficacious remedy was available. However, the court found that the reopening notice was not sustainable due to the lack of new material justifying it and the previous court direction for issuing the CBDT notification.

Conclusion:
The court quashed the notice of reopening dated October 1, 2009, and all consequential proceedings. It held that the petitioner had fulfilled all necessary criteria for availing deductions under section 80-IA(4)(iii) and section 80-IB(10) and that the reopening of the assessment was not justified. The petition was allowed with no order as to costs.

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